AGEFI Luxembourg - juin 2025

Juin 2025 7 AGEFI Luxembourg Economie Opinion - byBrunoCOLMANT, Ph.D.,Mem- ber of the Royal Academy of Belgium T he contemporaryworld re- sembles a kaleidoscope, where each turn reveals a new configuration of powers, interests, and rivalries.At the heart of this shif- tingmosaic, Trumphas designated China as theUnitedStates’ primary commercial adversary, accusing it of siphoningmillions of American jobs. His vice presi- dent, JDVance, adopts amore measured tone: he acknow- ledges the benefits of globaliza- tion, notably rooted inChina’s admission to theWorldTradeOrgani- zation in 2001, but emphasizes that nations once considered less advancedhave develo- ped industrial and innovative capacities that challengeU.S. dominance. The BRICS+ countries (Brazil, Russia, India, China, and South Africa, joined by Egypt, Iran, and Saudi Arabiain2024)contestWesternsupremacy.Theycrit- icize the West for prospering through globalization while enriching itself via financialization, often at the expenseofproductiveeconomies.Thisideologicaldi- vide pits the industry against speculation. This dy- namic reflects the famous Thucydides Trap, a concept from the Greek historian Thucydides (460BC– 395BC), who analyzed the Pelopon- nesianWaranddescribedasituationwherean establishedpower(theUnitedStates)andaris- ing power (China) risk conflict—here, a com- mercial one. The United States relies on Chinese imports tomeet its consumption needs. China’s growth, insufficiently driven by domestic consumption, de- pends on export markets like theU.S. Paradoxically, theU.S.mightneedChina more than the reverse, given its dependence onaffordablemanufac- tured goods. The Sino-American rivalryalso extends to tech- nology:China,advancingitsBeltandRoadInitiative, dominates 5G, while theU.S. seeks to secure its lead in semiconductors. Yet, Trump’s goal, beyond tariff threats, appears to be opening China’s market to American companies rather than sharply cutting Chinese imports, even though these likely benefit fromstate subsidies. Onthemonetaryfront,therenminbi’sgradualdepre- ciation—around 9%over the past three years—gives China a competitive edge by making its exports cheaper.Trumpdenouncesthisascurrencymanipu- lation,apartiallyvalidcritique,thoughBeijingdefends it as essential for economic stability. Conversely, the dollar could serve as a strategic tool.Adeliberate de- preciation of the greenback, aimed at reducing U.S. debt, would raise the cost of Chinese imports in the U.S., impacting Beijing’s exports. Holding just 3% of this debt, China could respond by diversifying re- servesintoeurosorgoldorexpandingtherenminbi’s use in trade, aswith the BRICS+. Militarily, this global fragmentationhighlights diver- gent priorities. China seeks regional dominance, par- ticularlyover Taiwan,which it views as a secessionist province.Aninvasion,thoughrisky,wouldbolsterits control over the South China Sea, a vital trade route. TheU.S.,withover700overseasmilitarybases,main- tainsaglobalpresence,anditsgrowinginfluenceover Greenland—richinrareearthsandstrategicallyposi- tioned against Russia—signals intent to counter Chi- nese and Russian ambitions in the region. These military strategies underscore a multipolar world, with interconnected fronts reflectingdistinct interests rather than a single theater of operations. Still, despite the acknowledgeddecline inU.S.-China relations and efforts to reducemutual dependencies, Sino-American ties will inevitably stabilize. Europe, however,risksmarginalizationinthisrealignment,es- peciallyas theU.S. no longer sees it as aunifiedentity but as a collection of separate commercial partners. Europe is exposed to a lack of industrial andmilitary cohesionandisfarfromimplementingtheDraghire- port’s call formassive investments in innovation and greenenergy.ItiscaughtbetweenaprotectionistU.S. market under Trump’s influence and Chinese im- ports tied to China’s production surpluses. To navi- gate this shifting landscape, Europemust build part- nerships with China, akin to U.S. negotiations for Chinese factory implants, while reinforcing strategic industries like semiconductors andAI, as the Draghi report advises. Morefundamentally,Europemustabandonbeingan unconditionalU.S.allyorexpectloyalty.Thisillusion, born of the 1944 liberation and the ColdWar, is out- dated in a world driven by national interests. In a maximoftenattributed tohim,HenryKissinger cap- tured this starkly: “To be an enemy of the United States is dangerous, but to be their friend is fatal.” Thus, the European Union must rethink its gover- nance, as divergent forces threaten its unity. For in- stance, the Visegrád countries and Romania now sharesimilarconcernsabouteconomicautonomy.To endure, Europe must craft a unique model, perhaps a strengthened confederalism. In conclusion, today’s world is a kaleidoscope, with each shift revealing new power, economy, and ten- sion patterns. Sino-American rivalries, the rise of BRICS+, Europeandivisions, andmilitaryambitions createadynamicpuzzlewherenopowercansustain lastinghegemony. In this chaos, resiliencehinges on adaptability. Europe has no choice but to embrace this complexity, redefining its model, role, and al- liances. Only a clear-eyed vision, free frompast illu- sions and thepull of paxAmericana,will enable it to navigate this labyrinth and prioritize cooperation over confrontation. United States and China: between forced cooperation and open confrontation T he PwC Business Barome- ter has rebounded to -1 in May, a notable improve- ment fromApril’s -13 reading and the highest level recorded so far this year. This rebound in sentiment within the GrandDuchy has been largely driven by asharprecoveryinconsumerconfidence. According to the Central Bank of Luxembourg, households have signifi- cantly revised their expectations regar- dingboththeirpersonalfinancialoutlook and, more markedly, the broader econo- mic situation in Luxembourg. This rene- wed optimismhas beenunderpinnedby alooseningofconsumercreditconditions in the first quarter of the year, as reported by the BankCredit Survey. The easing was primarily attributed to declining interest rates andnarrower len- dingmargins.Whileconsumersentiment hasimproved,theconstructionsectorhas only shownamodest recovery. Despite a slight upward trend in recent months, activityremainssubduedandwellbelow its long-term average. Encouragingly, since the beginning of the year, the pro- portion of firms reporting insufficient order backlogs has beendeclining, rever- singatrendthatpersistedthroughtheend of2024.Employmentprospectsinthesec- tor have also seen a mild improvement, and the share of companies citing labour shortages has recently stabilised. Conversely, job creation in the financial sector has slowed considerably. Preliminarydataforthefirstquarterindi- cate employment growth of just 0.3%, a pace last observed during the height of the COVID-19 crisis in late 2020. The sec- tornowfacesadditionalheadwindsfrom proposed US legislation. A provision in Donald Trump’s “One Big, Beautiful Bill Act” (OBBB) could significantly raise US withholdingtaxesondividendsandinte- restincome.Ifenacted,Section899would empower the US Treasury to impose withholdingtaxratesofupto50%,poten- tiallyimpactingLuxembourgUCITShea- vily exposed toUS securities. The implications of the OBBB extend beyond Luxembourg. The entire European Union may come under pres- sure, as the bill includes retaliatory mea- sures targeting European firms in res- ponse to taxes levied on US companies abroad.Thisdevelopmentcastsashadow over the region’s economic outlook, which had recently improved following a fifth consecutive month of business expansion in the Euro Area in May. Manufacturingledthegrowth,whileser- vices activity contracted for the first time sinceNovember. The resurgence in busi- nessconfidencewasfurthersupportedby easinginflation,whichfellto1.9%inMay, accordingtopreliminaryfigures.Withthe ECB’s2.0%inflationtargeteffectivelymet, policymakers enacted a fourth interest rate cut since the start of the year, poten- tially signalling the end of the current reduction cycle. In the US, inflation dropped to 2.4% in May,reinforcingmarketexpectationsthat the Fed will begin cutting rates by September,withasecondreductionlikely byyear-end.However,thisoutlookcould be disrupted if protectionist policies exert stronger-than-anticipated inflationary pressures. Trump has already indicated that unilateral tariffs could be reintrodu- ced imminently, as the current pause expires on9 July. Should further tariffs be imposed—andmetwithretaliatorymea- sures—the disinflationary trend could stall, forcing central banks to reconsider their monetary policy trajectories and potentially undermining business confi- dence in the secondhalf of the year. The monthly PwC barometer, in collaboration with AGEFILuxembourg, isaneconomicconfidence indi- cator that is intended to be a simple and pragmatic tool aimed at capturing the economic atmosphere of the Grand Duchy each month. The indicator is based on a number of sentiment indices published monthly by Eurostat and Sentix, which are based on surveys (businesses, consumers or investors/ analysts). The indicators used are: consumer confidence (EA for euroareaandLUXforLuxembourg),industrialconfi- dence(EAandLUX),constructionconfidence(EAand LUX),financialconfidence(EA),retailconfidence(EA), services confidence (EA) and the Sentix Index (EA). The evolution of the barometer over the past four years is displayed on the graph below. PwCMarketResearchCentre, IHSMarkit,Sentix,STATEC The monthly PwC Barometer L e Vice-Premier ministre, mi- nistre desAffaires étrangères et duCommerce extérieur, Xavier Bettel, a effectué une visite officielle auCanada du 10 au 12 juin 2025. Cette visite a été l'occasion d'inaugurer l'ambassade du Grand-Duché de Luxembourg au Canada. Lors de son discours prononcé à l'occasion de la levée du drapeau luxembourgeois devant la mairie d'Ottawa, en présence du maire Mark Sutcliffe, ainsi que lors de la réception organisée pour l'inaugu- ration, le Vice-Premier ministre est revenu sur les relations bilatérales entre le Luxembourg et le Canada. Il a souli- gné que l'ouverture officielle de l'ambas- sade duLuxembourg àOttawa coïncide avec le 80 e anniversaire des relations diplomatiques entre les deux pays et a rappelé que leLuxembourg et leCanada entretiennent depuis longtemps une relation privilégiée. Au-delà des relations historiques, le ministre Bettel a également évoqué les relations diplomatiques actuelles, fon- dées sur des valeurs communes et un engagement partagé au sein des organi- sations internationales. Par ailleurs, le chef de la diplomatie luxembourgeoise a mis en avant l'excellence des relations économiques entre les deux pays : le Luxembourg se classe au septième rang des investisseurs directs étrangers (IDE) auCanada, tandis que leCanada occupe la cinquième place parmi les pays non membres de l'Union européenne en matière d'IDE au Luxembourg. En résumé des relations diplomatiques, Xavier Bettel a souligné : « Le Canada et le Luxembourg ont peut-être des tailles et des histoires différentes, mais au final, nous réalisons que nous pouvons aller plus loin et plus vite ensemble. » ÀOttawa, Xavier Bettel a par ailleurs eu des entrevues politiques avec laministre des Affaires étrangères, AnitaAnand, et le ministre du Commerce international, Maninder Sidhu. En plus des relations bilatérales, ces deux rencontres ont éga- lement permis d'aborder l'actualité poli- tique, notamment le commercemondial, les préparatifs en vue de la conférence sur la solution à deux États, l'agression russe contre l'Ukraine, ainsi que le som- met de l'OTAN. Concernant la situation actuelle du com- merce mondial, les conséquences des tarifs douaniers pour l'UE et le Canada ont été au centre des discussions. Xavier Bettel et son homologue, Maninder Sidhu, ont insisté sur l'impor- tance du marché européen pour le Canada,etinversement.Laratificationde l'Accord économique et commercial glo- bal (AECG) par tous les États membres del'UEpourraitencoredavantagestimu- lerleséchangesentreleCanadaetleséco- nomies européennes. Xavier Bettel a évoqué la possibilité d'or- ganiser une prochaine mission écono- mique avec des entreprises luxembour- geoises auCanada. Outrelesentrevuespolitiques,leministre Bettel a également rencontré des repré- sentants du secteur économique cana- dien et a participé à une réunion avec les chefs de délégation des États membres de l'UE auCanada. ministèredesAffairesétrangèreseteuropéennes,de la Défense,de laCoopérationetduCommerceextérieur Inauguration de l'ambassade du Luxembourg au Canada ©MAE